The International Monetary Fund (IMF) has made a slight increase to its global growth outlook for 2023, due to “surprisingly resilient” demand in the United States and Europe, easing energy costs and the reopening of China’s economy after Beijing abandoned its strict COVID-19 restrictions.
It still sees the pace of global growth falling this year compared with 2022, but by a smaller margin than it predicted in October. The IMF is now forecasting 2.9% growth for 2023 – up from a 2.7% forecast in October – versus 3.4% growth last year.
The figures are in its latest World Economic Outlook, which warns that the world could easily fall into recession this year. “Central banks are likely to continue to tighten monetary policy to fight inflation, and concerns that this restrictive stance could tip the economy into a recession have increased in major advanced economies,” the report says.
The IMF now expects US GDP growth of 1.4% this year, up from a 1.0% prediction in October and following 2.0% growth in 2022. This is down to stronger-than-expected consumption and investment in the third quarter of 2022, a robust labour market and strong consumer balance sheets.
The Eurozone outlook is also up – to 0.7%, versus 0.5% in October, although this is down from 3.5% growth in 2022. The IMF says Europe has adapted to higher energy costs more quickly than expected.
The IMF has revised China’s growth outlook sharply higher, to 5.2% from a 4.4% forecast in October. Zero-COVID policies in 2022 slashed China’s growth rate to 3.0%, putting it below the global average for the first time in more than 40 years.
India’s outlook remains robust, with unchanged forecasts for a dip in 2023 growth to 6.1% but a rebound to 6.8% in 2024, matching its 2022 performance.
Britain is the only major economy the IMF expects to shrink this year. It forecasts a 0.6% fall in GDP as households struggle with rising living costs, including for energy and mortgages.
For 2024, the IMF has cut its global growth forecast very slightly to 3.1%, from 3.2% in October.